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President Obama reminds me of the fellow who's off to save the world
while he ignores the disaster in his own backyard. Instead of focusing
on the urgent problems facing the country  the credit crisis and the
collapse of the housing market  he's diverting scarce resources and
attention to solving health care, reforming education, and stopping
global climate change. Worse, his efforts to tackle these intractable
issues involve fiscal policies that exacerbate the current financial
crisis. He is not only driving the deficit up to unsustainable heights,
his policies will amount to a huge tax on all Americans.

President Obama claims he's only going to raise taxes on the wealthiest
Americans. But even if his tax-the-rich scheme didn't depress investment
and slow growth  which it will  there are other ways government
policies, in effect, tax individuals. Government also imposes tax
increases indirectly on individuals through policies that encourage
businesses to raise prices paid by everyone.

Most companies operate on relatively thin profit margins; the corporate average has
been about 8.5 percent since 1980. Those margins stay relatively constant because
capitalism works. If a company's profits get too high, a smart competitor comes in
and starts a rival business that makes the same product for less, and the greedy
company loses customers.

But what happens when government taxes all businesses  or even a
select group of companies? If the company's profits decline, the company
might reasonably respond by laying off workers or reducing capital
outlays to cut costs. That's not exactly what we'd like to see at a time
of skyrocketing unemployment, declining construction, and decreasing
manufacturing orders. The alternative for most businesses is simply to
pass on the increased costs to the consumer.

That is exactly what will happen if President Obama's cap-and-trade
policy on greenhouse emissions is enacted by Congress. The president
wants to impose stricter pollution controls on carbon emissions and
allow companies that can't meet those regulations to purchase the right
to pollute more through a government auction, with the money flowing
into the federal budget.

But how will energy companies pay for what is really a new government
tax? By passing it on to their consumers, of course. And unlike other
businesses, where competition can help control costs, there isn't much
competition in the utilities world. Most of us have few choices when it
comes to purchasing electricity or natural gas. We're pretty much
captives of our geography, so we won't have a choice about choosing a
more efficient, less polluting electricity company if President Obama
gets his way on cap-and-trade legislation.

The Congressional Budget Office estimates that cutting carbon emissions
by 15 percent would result in a huge cost to most Americans. According
to CBO's analysis as reported on the Wall Street Journal editorial page
March 9, the plan would cost the bottom 20 percent of households 3.3
percent of their entire after-tax incomes every year, or about $680,
while those in the next three quintiles would pay between $880 and
$1,500 a year in extra energy costs.

This is exactly the wrong thing to do, and the worst time to do it. The
president ought to get over his messiah complex. He's not going to slow
the rise of the oceans, as he promised in June when he clinched the
Democratic presidential nomination. What the country needs now is not
grand schemes to redistribute wealth and provide all Americans
cradle-to-grave education and health care at government expense. We
don't even need someone to find a way to keep all those homeowners
facing foreclosure in their homes. Sadly, the housing bubble has burst
and everyone is going to suffer, especially those who couldn't afford
the homes they bought in the first place.

What we need now is someone who can figure out what actions the
government can and should take to unfreeze credit. If President Obama
fixes that, he'll be miracle worker enough.

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JWR contributor Linda Chavez is President of the Center for Equal Opportunity. Her latest book is "Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics". (Click HERE to purchase. Sales help fund JWR.)